16 April 2007 16:57 [Source: ICIS news]
SHANGHAI (ICIS news)--The regional polymer futures contracts due to be launched by the London Metal Exchange (LME) in June are expected to be more reflective of global trade flow, said Societe Generale Corporate & Investment Banking's plastics analyst, Sebastian Castelli, on Monday.
Castelli was speaking at the sidelines of the 3rd ICIS Asian Polymers Conference in ?xml:namespace>
The better reflection was relative to that of the LME global polymer futures contacts launched two years ago, which were mostly used by traders and not widely adopted as price reference due to the difficulty in adapting them for regional trades, said Castelli.
The new regional LME contracts are estimated to have the potential to reflect 60-85% of the global physical transactions within the polymer industry.
They will be for polypropylene (PP) and linear low density polyethylene (LLDPE), and will be categorised geographically for the different regions, such as southeast Asia, the
Futures contracts provide a new dimension to the polymers trade as they allow transactions to take place 15 months ahead of time and hence enable buyers and sellers to manage raw material prices instead of reacting to price movements, he added.
The LME launched its global plastics future contracts at the end of May 2005. Since that launch other exchanges have sought to capitalise on the interest in polymers futures trading.
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